Market Analysis: Europe

by By Lara L. Sowinski On Apr 9, 2013

In terms of sheer size, the European Union is the largest import market for agricultural commodities and food in the world, and over the past 12 years, agricultural imports by the 27-nation bloc have risen by roughly 145 percent, from $53.3 billion to over $131 billion, according to the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS).

This is undeniably a lucrative market for U.S. exports in the farm and food sector, but certain challenges exist.

Market overview

A closer look at the numbers reveals that while the EU market opportunities, in general, are growing, the U.S. has a disproportionately smaller piece of the pie. During the period 2000-2012 when the EU experienced triple-digit growth, the U.S. likewise saw its agricultural exports grow 176 percent. However, its exports to the EU market specifically only expanded 54 percent.

In large part, the reason comes down to competition—the U.S. is increasingly competing against Brazil, China, Chile and other countries on the European continent, such as the Ukraine. For instance, soybean shipments from Brazil to the EU are growing much faster than similar exports from the U.S., while fruit and vegetable exports from China and Chile are also taking a larger market share.

Meanwhile, tariff and non-tariff barriers (for example quotas, antidumping duties, restrictions on GM foods) are also stunting U.S. agricultural goods exports, particularly corn and soybeans. Furthermore, while Russia’s inclusion in the WTO last year was a significant development for U.S. exporters, just last month Russian officials moved to ban all U.S. imports of beef, pork, turkey and other meat products over the use of ractopamine, an animal feed additive.

Where the opportunities lie

On the positive side, American companies have boosted exports of high value, consumer oriented food products to the European market. For instance, exports of tree nuts have grown from $381 million in 1980 to over $1.7 billion in 2012. Other top exports to the EU include soybeans ($1.5 billion), processed fruit and vegetables ($514.9 million), wine and beer ($492.4 million), and feed and fodders ($832 million).

Without a doubt, the proposed Transatlantic Trade and Investment Partnership between the U.S. and EU presents a huge opportunity for U.S. exporters in various sectors, including farm goods and food. The Obama administration is preparing to launch negotiations on the pact this year.

At the same time, the federal government and state agencies offer a wealth of support and resources for U.S. exporters.

Original Juan Specialty Foods in Kansas City, KS has successfully expanded its exporting business by taking advantage of various trade missions. Last year alone, Original Juan’s vice president of sales, Greg Dennis, traveled to India, Russia, Germany and Switzerland. The company received a State Trade and Export Program (STEP) grant from the Kansas Department of Agriculture to help offset travel expenses.

In a recent article highlighting Original Juan’s export business, Heather Angus-Lee with JustFoodERP, a software and services provider to Original Juan’s and other food companies, notes that exporting opportunities for American firms are plentiful, notably for small- and medium-sized enterprises. And, the U.S. Department of Commerce and other state and federal agencies are ready to help them get there.